April 3 (Bloomberg) -- OAO Novatek, Russia’s second-biggest
natural-gas producer, set the rate on a loan of as much as $1
billion, according to two people with knowledge of the matter.

Novatek is offering to pay interest at 175 basis points
more than the London interbank offered rate for the five-year
facility, said the people, who asked not to be identified
because the deal isn’t public. The Tarko-Sale, Siberia-based
company is self-arranging the deal, which lenders must commit to
before the end of the month, the people said.

The interest margin matches those offered on a loan of the
same maturity sought by OAO Gazprom Neft, the oil unit of
Russian competitor OAO Gazprom, the world’s biggest natural gas
producer, according to data compiled by Bloomberg. OAO Uralkali,
the largest potash producer by output, is also raising a five-year facility with a higher margin of 215 basis points more than
Libor, the data show. A basis point is 0.01 percentage point.

Novatek is rated Baa3 by Moody’s Investors Service and BBB-by Standard & Poor’s and Fitch Ratings, the lowest investment-grade rankings, data compiled by Bloomberg show. Gazprom Neft
and Uralkali have the same grades from the ratings firms, the
data show.

Novatek is planning to build a $20 billion liquefied
natural gas plant on the Yamal Peninsula in Russia’s arctic
region with French company Total SA, Chief Executive Officer
Leonid Mikhelson said.

Novatek has two dollar-denominated loans totaling $500
million maturing this year, Bloomberg data show. Officials at
Novatek weren’t immediately able to comment on the financing.